Dao Heng Bank Group sees 40pc profit growth
A $353.96 million gain on the disposal of fixed investments helped Dao Heng Bank Group record a 40.8 per cent growth in attributable profit for the year to June, while core activities only managed an average performance.
Attributable profit for the year to June was $2.11 billion, up from the previous $1.5 billion.
Company spokesman Helen Kwan said the majority of the gain stemmed from the disposal of its old headquarters in Sheung Wan to New World Development.
Profit on the disposal of office floors in OTB Building and Wu Chung House to Guoco Land, the listed property arm of Guoco Group, also contributed to the gain, she said.
Profit derived from core banking activities grew by a mild 12.8 per cent.
The 52.9 per cent increase in charges for bad and doubtful debts to $338.36 million was the major factor for a slowdown in operating profit growth.
The company, which controls the 96-branch Dao Heng Bank, did not provide a breakdown of the charges into general and specific provisions.
It said there was a one-time provision for loans extended to a large manufacturing customer, resulting in higher-than-normal specific provisions, without giving further details.
It also said tightened liquidity had remained evident in the trade finance sector, with credit quality weakening slightly.
'From a prudent perspective, we took the opportunity to tighten our credit screening and provisioning policies in order to safeguard loan quality,' it said.
The company saw loans grow 22.2 per cent to $64.54 billion during the period.
Net interest income increased in line with loan growth by 23.9 per cent while other operating income, which comprises fees and commissions, rose by 3.3 per cent.
Growth in operating income before provisions, was 19 per cent, slower than the 22 per cent increase in operating expenses.
The company's deposits advanced 18.1 per cent to $103.71 billion.
The bank said it would boost its involvement in regional and international markets, raising long-term funds as part of its strategy to diversify funding sources.
Earnings per share were $3.03, up 37.7 per cent from the previous $2.2. A final dividend of 85 cents per share was proposed.